Generic Biosimilars: Good News Buried in Today’s Newspaper

Today’s Managing Health Care Costs Indicator is 27%

The best news about managing health care costs this week is probably buried on Page B6 of today’s New York Times. Amgen – the maker of epogen and other biologic medications, has formed a joint venture with generic pharmaceutical manufacturer Watson Pharmaceuticals, to manufacture and market biosimilars- the equivalent of generics for the biologic medications. They’ll be looking to make biosimilars of drugs that competitors to Amgen currently market – which is fine because other biopharmaceutical companies including Biogen-Idec have also begun to enter this market.

Why is this such good news? The biologic medications – including medicines for multiple sclerosis, rheumatoid arthritis, hemophilia, other rare genetic diseases and certain forms of cancer represent a larger and larger portion of the total pharmaceutical budget. Many people aren’t aware of this because these medications are often administered in a physician’s office- so the costs of them are not obvious when patients go to their local neighborhood pharmacy. Many of these medications cost $30-$40,000 per year – and drugs for hemophilia and other rare genetic diseases can cost hundreds of thousands of dollars per year.

CVS Caremark estimates that specialty medicines – the kind of drugs that Amgen and Watson have agreed to market – will be up from 13% of total pharmacy cost (2005) to 27% of total pharmacy cost (2015). I’ve already seen some instances where specialty pharmacy spending for certain employers was that high. These are good drugs – delivering longer and better quality life to many patients. But they are enormously expensive.


Biosimilars won’t be cheap like generic “small molecule” drugs – but they will be less expensive than the current specialty medications, and they will help pressure brand name biopharmaceutical manufacturers to constrain their own prices.

The Affordable Care Act requires that the FDA chart a path for marketing of biosimilar medications. The government should get these regulations out quickly so that we can let the competitive market work its magic.

Avastin: Great hope, or futile care?

Today’s Managing Health Care Costs Indicator is $7 billion

That’s the annual revenue that Genentech gets from sale of Avastin.

Avastin is the first of the anti-angiogenesis medications – which we all hoped based on mice studies would kill cancers by starving them of blood supply.  It works – but not nearly as well as we hoped. An early study suggested that the drug might prolong life in those with breast cancer, but subsequent studies have actually shown that the drug offers no benefits, but does come with severe and even life-threatening side effects.

The FDA advisory panel voted 6-0 to remove the breast cancer treatment indication from this drug, which costs $90,000 per year.  The drug remains on the market – and continues to be recommended for the treatment of other cancers.   CMS will continue to pay for the drug when prescribed for breast cancer despite the adverse evidence, as will just about all private insurers. Those that announce they will not pay for Avastin are subject to blizzards of emails and protests and appeals.

Here are two voices on this issue. The first, yesterday’s Wall Street Journal editorial:

…There's no denying that [The FDA decision] decision is an awful turn for anticancer progress and innovation, and especially for the women who may lose a treatment option in the time they have left to live.”

The second, Joe Nocera today in the New York Times:

Here is an enormously expensive drug that largely doesn’t work, has serious side effects and can no longer be marketed as a breast cancer therapy. Yet insurers, including Medicare, will continue to cover it...If we’re not willing to say no to a drug like Avastin, then what drug will we say no to?

 We won’t solve the health care cost crisis if we continue to cover expensive, ineffective drugs.   It’s hard for me to see this as heavy –handed government overreach.  Forget about the cost –the medicine appears to make the lives of terminally ill women worse.  Giving physicians and patients the information they need to make the best decision seems like a good role for the FDA.